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David Uriarte, An Individual v. Wells Fargo Bank

November 3, 2011

DAVID URIARTE, AN INDIVIDUAL;
CELESTINA URIARTE, AN INDIVIDUAL,
PLAINTIFFS,
v.
WELLS FARGO BANK, N.A., AS TRUSTEE FOR OPTION ONE MORTGAGE LOAN TRUST 2006-1 ASSET BACKED CERTIFICATES, SERIES 2006-1, A NATIONAL ASSOCIATION; POWER DEFAULT SERVICES, INC., A DELAWARE CORPORATION; DOES 1 THROUGH 100, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

ORDER REMANDING ACTION TO STATE COURT

On September 9, 2011, Defendants removed this action, alleging this Court had original jurisdiction under 28 U.S.C. § 1332, based on complete diversity among the parties. On September 22, 2011, the Court issued an Order to Show Cause why this action should not be remanded for lack of subject matter jurisdiction. Defendants responded to the Court's order on September 30, 2011. Having considered Defendants' response, and for the reasons set forth below, the Court concludes there is not complete diversity among the parties, and therefore no diversity jurisdiction exists. Accordingly, the Court hereby REMANDS this action to state court.

BACKGROUND

Plaintiffs filed this action in the San Diego Superior Court on July 19, 2011. [Doc. No. 1.] On September 9, 2011, Defendants removed the action to this Court on the basis of diversity jurisdiction. [Id.] Plaintiffs filed their First Amended Complaint ("FAC") on October 6, 2011.

[Doc. No. 8.] The FAC does not allege any federal causes of action. [See generally id.]

LEGAL STANDARD

Unless otherwise provided, a civil action filed in state court may be removed to a federal district court if that court has original jurisdiction based on either "diversity of citizenship" or a "federal question." See 28 U.S.C. § 1441(a); see also id. §§ 1331, 1332. "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). The Ninth Circuit "strictly construe[s] the removal statute against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per curiam). As such, "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Id. "The 'strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id.; see also Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 685 (9th Cir. 2006) (per curiam).

DISCUSSION

Defendants removed this action on the basis of diversity jurisdiction. "Jurisdiction founded on [diversity] requires that the parties be in complete diversity and the amount in controversy exceed $75,000."*fn1 Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003) (per curiam); see also 28 U.S.C. § 1332(a). For complete diversity to be present, all plaintiffs must have citizenship different from all defendants. See Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 n.3 (1996). In this case, it is undisputed that Plaintiffs are citizens of California. (See Notice of Removal, at 3 [Doc. No. 1]; FAC ¶¶ 1-2 [Doc. No. 8].) It is also undisputed that Defendant Power Default Services is a Delaware corporation with its principal place of business in Texas, (Notice of Removal, at 4), and is therefore a citizen of both Delaware and Texas. See 28 U.S.C. § 1332(c)(1). Finally, it is undisputed that Defendant Wells Fargo Bank, N.A., a national banking association, has its main office in South Dakota, (Notice of Removal, at 3-4), and therefore is a citizen of that state. See Wachovia Bank v. Schmidt, 546 U.S. 303, 307, 318 (2006).

The sole question before the Court is whether Wells Fargo is also a citizen of California, where it has its principal place of business,*fn2 and whether, as a result, complete diversity is lacking.

"All national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of the States in which they are respectively located." 28 U.S.C. § 1348. Most recently, the Supreme Court construed the word "located" in Wachovia Bank v. Schmidt, 546 U.S. 303. In Wachovia, the Supreme Court rejected an approach that would consider a national banking association a citizen of every state in which it maintains a branch. Id. at 307. Rather, the Supreme Court concluded that, for purposes of § 1348, "a national bank . . . is a citizen of the State in which its main office, as set forth in its articles of association, is located." Id.

Contrary to Wells Fargo's contention, however, Wachovia left open the possibility that a national bank may also be a citizen of the state in which it has its principal place of business.

First, this precise issue was not before the Supreme Court, and therefore the Court expressly declined to address it. See id. at 315 n.8 ("Other readings mentioned in Court of Appeals opinions are the bank's principal place of business and the place listed in the bank's organization certificate. Because this issue is not presented by the parties or necessary to today's decision, we express no opinion on it." (internal citations omitted)). Second, the Supreme Court alluded to the possibility that, to reconcile 28 U.S.C. § 1348, governing national banks, and 28 U.S.C. § 1332(c)(1), governing corporations in general, a national bank might have to be considered a citizen of the state in which its main office is located and the state of its principal place of business. See id. at 317 n.9 ("To achieve complete parity with state banks and other state-incorporated entities, a national banking association would have to be deemed a citizen of both the State of its main office and the State of its principal place of business." (citations omitted)).

Therefore, two approaches have emerged. On the one hand, in cases predating Wachovia, the Fifth Circuit and the Seventh Circuit unanimously concluded that for purposes of diversity jurisdiction, a national bank is a citizen of both the state in which its main office is located and the state of its principal place of business.*fn3 See Horton v. Bank One, N.A., 387 F.3d 426, 436 (5th Cir. 2004) ("We hold that the definition of 'located' is limited to the national bank's principal place of business and the state listed in its organization certificate and its articles of association."); Firstar Bank, N.A. v. Faul, 253 F.3d 982, 994 (7th Cir. 2001) ("[W]e hold that for purposes of 28 U.S.C. § 1348 a national bank is 'located' in, and thus a citizen of, the state of its principal place of business and the state listed in its organization certificate."). On the other hand, the Eighth Circuit recently held, in a 2-1 decision, that a national bank is a citizen of onlythe state where its main office is located.*fn4 See Wells Fargo Bank, N.A. v. WMR e-PIN, LLC, 653 F.3d 702, 710 (8th Cir. 2011) ("[W]e reject appellants' claim that Wells Fargo is a citizen of both South Dakota and California . . . ."). Judge Murphy dissented from the Eighth Circuit's decision, indicating that he would have followed the approach of the Fifth and Seventh Circuits. See id. at 716-17 (Murphy, J., dissenting) ("I would hold that national banks are citizens of the state where their principal place of business is located in addition to the state in which their main office is located.").

Upon careful examination, the Court believes the approach advanced by the Fifth and Seventh Circuits, as well as by Judge Murphy's dissent in WMR, is more consistent with ยง 1348's legislative history and the Supreme Court's decision in Wachovia. Accordingly, the Court concludes that for purposes of diversity jurisdiction, a national bank is a citizen of boththe ...


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